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Logistic Management

Key Decision Area in Warehousing: Location, Size, Layout, Ownership

02 March 2023
Finding the perfect balance between location size layout and ownership is the key to successful warehousing  and this scale helps us get there
Decision AreaKey ConsiderationPotential Impact
LocationProximity to labour, customers, suppliers, transportation, and infrastructure.Significant impact on efficiency and cost-effectiveness of operations
SizeCurrent and future needs of business considering level of stock-keeping units (SKUs), volume of products and equipment.Costly to build and operate if wrong sizing is determined
LayoutEasy access to inventory items, efficient location of personnel, and proper storage of goods.Improves efficiency and safety, enhances stock rotation
OwnershipWeighing benefits and drawbacks of owning vs. leasing a warehouseDetermines level of control, flexibility, and cost implications
LocationEvaluation benefits and costs of alternative locationsDirect impact on storage and transportation costs, lead times, and customer service levels
SizeDetermination of shelves and racks needed to accommodate itemsImproper planning may lead to space wastage or insufficient storage capacity
LayoutConsideration of safety, lighting, aisle width, and storage capacityAffects ease and speed of finding and moving items, customer satisfaction
OwnershipDecision between lower up-front capital requirements or having complete controlAffects the business operation expansion or shrinking process
LocationMaximizing potential benefits from warehouse locationProximity to key resources can enhance overall business success
OwnershipAlignment with organizational goals and needsAffects strategy, scalability, and long-term planning
  • Location

  • Size

  • Layout

  • Ownership

Warehousing is integral to any supply chain, where products are stored temporarily and made available to customers. Like any business activity, several important decisions need to be made regarding the design and operation of a warehouse. Choosing the right location, size, layout, and ownership structure are some of the key considerations when establishing a warehouse. With adequate attention given to these key decision areas, businesses can gain a competitive advantage.

Location

One of the most important decisions related to warehousing is location, as it can significantly impact the efficiency and cost-effectiveness of operations. Ideally, warehouses should be strategically located to minimize storage and transportation costs, reduce lead times and increase customer service levels. While there are several factors to consider, some main benefits to focus on are access to labor, customers, suppliers, transportation, and infrastructure. Evaluating the benefits and costs of alternative locations should be done before settling on one.

Size

Estimating the size of the warehouse needed is another critical decision area. As warehouses can be costly to build and operate, the space size should be determined according to the current and future needs of the business. Typically, warehouses are sized according to the level of stock-keeping units (SKUs) expected to be stored, along with the volume of products, equipment, and supplies necessary for daily operations. Aside from determining the overall size of the warehouse, it is also essential to carefully analyze the number and types of shelves and racks needed to store different items.

Layout

After the size is determined, the layout should also be carefully planned to facilitate easy access to inventory items, efficient location of personnel, and the proper storage of goods. When designing a warehouse layout, special attention should be given to safety, lighting, aisle width, storage capacity, and stock rotation. As there are a variety of specialized design principles, businesses may prefer to hire a professional to help them draw up a suitable layout.

Ownership

Finally, businesses have to decide whether to own or lease a warehouse. Relying on leased space may entail advantages such as discounted rent, lower up-front capital requirements, and more flexibility when the organization is expanding or shrinking. On the flip side, running the warehouse internally may provide the control needed, alongside greater visibility and control over processes. In any case, businesses should weigh the different ownership structures available and make an informed decision based on the goals and needs of the organization.

In conclusion, businesses should pay close attention to the critical decision areas of warehousing when designing and operating their logistics infrastructure. By assessing the different locations, sizes, layouts, and ownership structures of current and future needs, they can better manage costs and maximize the benefits of this crucial component of the supply chain.

Warehousing location and size define opportunity layout, optimize success and ownership, and enable long-term security.

IIENSTITU
Location, Proximity to labour, customers, suppliers, transportation, and infrastructure, Significant impact on efficiency and cost-effectiveness of operations, Size, Current and future needs of business considering level of stock-keeping units (SKUs), volume of products and equipment, Costly to build and operate if wrong sizing is determined, Layout, Easy access to inventory items, efficient location of personnel, and proper storage of goods, Improves efficiency and safety, enhances stock rotation, Ownership, Weighing benefits and drawbacks of owning vs leasing a warehouse, Determines level of control, flexibility, and cost implications, Location, Evaluation benefits and costs of alternative locations, Direct impact on storage and transportation costs, lead times, and customer service levels, Size, Determination of shelves and racks needed to accommodate items, Improper planning may lead to space wastage or insufficient storage capacity, Layout, Consideration of safety, lighting, aisle width, and storage capacity, Affects ease and speed of finding and moving items, customer satisfaction, Ownership, Decision between lower up-front capital requirements or having complete control, Affects the business operation expansion or shrinking process, Location, Maximizing potential benefits from warehouse location, Proximity to key resources can enhance overall business success, Ownership, Alignment with organizational goals and needs, Affects strategy, scalability, and long-term planning
Warehousing supply chain location size layout ownership structure competitive advantage stock-keeping units safety lighting aisle width storage capacity stock rotation leased space control visibility.
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